How much house you can afford depends on where you live

  • In this Tuesday, March 6, 2018, photo homes stack up in a neighborhood in San Jose, Calif. NerdWallet calculated affordability for 172 metropolitan areas by comparing the median annual household income and the monthly principal-and-interest payment for a median-priced single-family home and found that the least affordable homes are in the San Jose. (AP Photo/Marcio Jose Sanchez)

Your ability to own a home is affected by where you live. Even people with modest incomes can afford homes in Decatur, Illinois, the metropolitan area with the nation’s most affordable houses. At the other end of the affordability spectrum is the San Jose, California, metro area, where high incomes are outmatched by stratospheric home prices.

A home is most affordable when it doesn’t cost much more than a year’s pay. Decatur is an affordable market because the median house costs about one and a half times the median annual income. (“Median” is the midpoint, where half of the values or incomes are lower and half higher.) In comparison, there’s San Jose, where a typical household earns a six-figure income but a median single-family house costs about 12 times what a typical household earns.

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Every quarter, NerdWallet calculates home affordability for 172 metropolitan areas by comparing the median annual household income and the monthly principal-and-interest payment for a median-priced single-family home.

Most-affordable metro areas

1. Decatur, Illinois

Median home price: $73,000

Median household income: $46,198

Principal and interest payment: $294 (equals 7.6 percent of median monthly income)

2. Cumberland, Maryland-West Virginia

Median home price: $86,200

Median household income: $45,808

Principal and interest payment: $347 (9.1 percent of monthly income)

3. Elmira, New York

Median home price: $100,800

Median household income: $51,269

Principal and interest payment: $406 (9.5 percent of monthly income)

4. Binghamton, New York

Median home price: $103,000

Median household income: $51,360

Principal and interest payment: $415 (9.7 percent of monthly income)

5. Peoria, Illinois

Median home price: $114,800

Median household income: $57,090

Principal and interest payment: $463 (9.7 percent of monthly income)

Least-affordable metro areas

1. San Jose-Sunnyvale-Santa Clara, California

Median home price: $1.37 million

Median household income: $110,040

Principal and interest payment: $5,533 (60.3 percent of median monthly income)

2. Honolulu, Hawaii

Median home price: $775,500

Median household income: $80,513

Principal and interest payment: $3,125 (46.6 percent of monthly income)

3. San Francisco-Oakland-Hayward, California

Median home price: $917,000

Median household income: $96,677

Principal and interest payment: $3,695 (45.9 percent of monthly income)

4. San Diego-Carlsbad, California

Median home price: $610,000

Median household income: $70,824

Principal and interest payment: $2,458 (41.6 percent of monthly income)

5. Los Angeles-Long Beach, California

Median home price: $545,500

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Median household income: $65,950

Principal and interest payment: $2,198 (40 percent of monthly income)